politics

Modern Capitalism – The Marxist View: Part 11

The feared “Soviet” secret service, the KGB, was always controlled by the the CIA (Central Intelligence Agency of the USA). As such, the CIA — KGB played an insidious and decisive role in the destruction of the Soviet Union.

The fantasy-hypothetical all-consuming genie comes to life – sort of. Earlier we

imagined “a fantasy-hypothetical system, whereby some magical external (to the real world economy) force buys up everything that would otherwise be ‘over-produced,’ paying real hard cash for all these goods. No crises. The economy can roll on indefinitely, without a glance backwards.”

The expansion of unbacked (phony-baloney) money and the steep rise in debt has given life to our all-consuming genie. But at a huge price, which has yet to be paid in full.

Or brutal default.

The real “genie” is far from perfect, even in the here and now. Capitalist governments and central banks do not endeavor to ensure consumption of everything “extra” produced by the capitalist mode of production and reproduction. In such a case, the result would be monstrous, precipitous inflation and a resultant complete collapse of the money system.

The objective, rather, is a controlled, “moderate” utilization of our “genie.” Who turns out not be magic at all, but eventually demands his recompense. Our “genie” is used conservatively, he is called upon to fulfill his job only partially – even in the “good” times.

Central banks do not always buy bonds, thereby releasing money into the economy. There are occasions when they sell bonds, thereby tending to reduce the money in circulation. Governments do not always increase the debt – which becomes a vehicle for increasing the nation’s consuming power; there are infrequent years when the debt is somewhat reduced. Interest rates are not always rock-bottom low, thereby encouraging people to borrow and to increase the money in circulation. Taxes can be not only lowered, but raised, and higher taxation may restrict business and consumer spending.

What we have is a regulated “genie,” who keeps the economy from collapsing. He keeps the profits rolling in, but solves no basic problems.

In the US – the world’s most powerful economy — the massive poverty-stricken ghettos and barrios are only one indication that the modern-day capitalist system cannot overcome its massive, structural fault lines. “Overproduction” remains an insoluble problem. Poverty, racism, aggression aimed at conquering other peoples, bankruptcies, forced evictions etc. etc. remain an inherent feature of society. Recessions, stock-market crashes, dislocations still make their presence felt.

But an all-consuming economic crash of society — at least in the privileged imperialist world – has been delayed. For decades, since the worldwide Great Depression of the 1930’s. And our moderately-utilized “genie” has more-or-less done his job – so far.

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The goodhearted genie is a false friend. His “good works” are based on an irrevocable long-term tendency for the nation’s money to become increasingly phony-baloney, unbacked by gold or any other real repository of value. The money has apparent “value,” only insofar as it is accepted as having “value.” What happens when that acceptance evaporates or when the issuing government becomes no more?

Private debt may suffer reversals, but government debt inexorably – with rare, minor breaks here and there – continues its climb upwards.

At some point, government and other debts cannot be repaid. At some point, some crisis will force people to question the “value” of phony-baloney money and demand real value for their goods and services.

No fake system can last forever. No matter how cleverly designed and artfully managed.